Share This:

Frugaling is fast approaching its third anniversary. Three years of articles, debates, conversations, comments, and millions of visitors. It’s been a humbling journey, but I’ve struggled with a concept at the center of my writing: “personal finance.”

The term grew in popularity in the early 1900s. It was primarily deployed and embraced by the middle classes of America. To scrimp and save was seen as virtuous. You could take nicer vacations, save for retirement, or give more to charity by budgeting better. Undoubtedly, all good things.

“Personal finance” has allowed many to live a fuller life, but also placed much of the burden and responsibility on individuals. Unfortunately, little has changed in nearly 100 years of regular use. Amidst record breaking income and wealth inequality, we seem frozen in time — continuing the use of this term without reservation or thought.

We must ask ourselves some questions about financial education and planning: Are people able to scrimp and save like years prior? Does personal finance capture the economic hardship many face? Is this the best advice we can offer after 100+ years of collective financial experience?

The answer is no, no, and no.

When I break from the 100-year-old script of personal finance and call out the tragedy of income and wealth disparities, people tend to invoke the personal responsibility argument. In response, I receive comments and emails from devout readers who balk at my hesitation to call out financial errs and place more emphasis on society. They tend to ask, What’s the point of saving and making more money if people aren’t personally responsible? They suggest that finances are personal and failure is on the individual.

Over time, I’ve grown increasingly more resistant to the term. For the oppressed, try as they might, their budgets do not add up. They must seek social assistance or face dire consequences (i.e., hunger, eviction, and homelessness).

Whether we know it, prefer it, or like it, personal finance alludes to personal responsibility for errors and successes.

Fail? It’s your fault.

Succeed? It’s your smarts.

Can’t we do better than these oversimplified, overused assumptions? Fortunately, we have an opportunity to approach finance in a new way. It starts with a reinvention of terms. As inequality has worsened, the term has become antiquated and inaccurate. We need to shift to something more appropriate, which captures the diversity of responsibility.

Today I propose we seek a new term and call it: “social finance.” Whereas personal finance places the burden solely on the individual, social finance highlights the environmental, societal, and governmental consequences to an individual.

With social finance, we understand that budgeting will be more difficult for African American men than White guys like me. Why? Because I was afforded great privilege. For instance, one-third of African American men will go to prison in their lifetime. Word to the wise: it’s not because black men are more predisposed to crime than white men.

With social finance, we understand that making money will be more difficult for women than White guys like me. Why? Because I continually earn more than women; not because I work harder, but because society pays women 64% of what I make as a man.

With social finance, we understand that intellectual and physical disabilities affect earning potential — not temporarily-abled White guys like me. Why? Because persons with disabilities are prejudicially fired, refused work opportunities, and the first to lose their jobs to automation and outsourcing.

Personal finance fits well within Western culture. We value hard work, ethic, and personal responsibility above all else. The idea of social finance will be challenging for many, but I believe we can do it. What do you think?

Share This:

I stood there, harboring a chip on my shoulder and feeling like I was carrying a burden in my chest. School was entering the toughest part of the year, and I was still trudging along in sub-zero, arctic-like temperatures of Iowa. Stressed out and pissed off, the snow pummeled and angled for my eyes.

Over a foot of snow accumulated in two hours. I couldn’t see the concrete. Roads and pedestrian paths disintegrated. Cars revved and swerved with each degree shift of the wheel. I feared I’d be the accidental recipient of an absentminded or reckless driver.

A face mask crystallized my condensed breath. I blinked and shards seemed to puncture my eyelids. Although, without it, my nose would likely fall off. I could barely breathe – artificially choked by the restrictive layer like an asthmatic marathoner.

Snow drifts and plows lined the sidewalks. My momentum couldn’t carry me over the hills, so I looked like a football player running through tires. The tendons in my knees stretched and torqued under the trot. I could tell they weren’t happy with me — every time I stopped they screamed and ached.

What was I running to? My place of work: the homeless shelter. A beacon and bastion of hope – the warm solace where my weathered feet might warm. Even more, I was motivated by the fact that my brief discomfort was another’s quotidian life. The punishing cold and snow was an unfortunate norm to the population I came to serve. The homeless were suffering far more at the worst part of the season. I needed to get there and try to make a difference.

An academic year — summer to summer — passed since I started working at the shelter. I saw the seasons change, turnover in residents, and demographic shifts. People with pennies to their name would come in and seek shelter — some would be turned away for lack of room. Some would be paired with case managers, find work, and a fresh start in a new apartment. Sometimes the system worked, and sometimes it failed. Some homeless people were self-starters, and others needed additional help.

As a white guy from a middle-class neighborhood in the Denver area, my experience in life seemed to differ from many of the residents of the shelter. My parents worked hard, but also made time for me. They are still married after 30 years. And they consciously decided on neighborhoods with strong schools. Many residents came from broken families and piss poor educations.

I was born white, and with it, I gained an unearned privilege. Police would pay less attention to me. Teachers would pay more attention to me. Honors and advanced placement (AP) courses were always available, and I was encouraged to take them. Life was easy in these respects. I had difficulties growing up – often feeling like an outsider – but these paled in comparison to systemic racism, segregation, and lost opportunities.

In many ways, I grew to appreciate that shelters are society’s measly attempt at righting systemic wrongs. They focus on the bare necessities usually: a place to sleep and a daily meal. Occasionally, there’s a pair of shoes or gloves that will prevent frostbite.

How do we let people ever get this low? How do we fail to provide for those in need of greater assistance? Unfortunately, answers are complex. It requires changing the dialogues we have with others and in our own heads about poverty, income/wealth inequality, and homelessness.

On my last day, I hugged the staff goodbye and shook the hands of some residents I had gotten to know. My eyes welled up with sadness. A year of counseling and communication with one of the most vulnerable populations… It was overwhelming. I had continuously reached my limits as a counselor – newly defined due to this experience. Sometimes I couldn’t help as much as I wanted because basic needs were unmet. My role at that point became to assist in whatever way I could.

Today, I write about this experience in the hope that you’ll listen and advocate for those in need. The financial burdens of people without homes is great, but the systemic problems that lead to this place are even greater. Advocacy is the only option, and it goes beyond serving food at a soup kitchen or counseling. Change necessitates sociopolitical involvement, which requires us to write, vote, and get upset about it.

We live in a perplexing time of great wealth with horrific poverty. How the two exist and continue is a consequence of systemic, legal, and political action. To change it, we must use the same tools.

In Salt Lake City, there’s a movement afoot to change this paradigm. It’s called, “housing first.” Instead of judging people and calling them “lazy addicts,” Salt Lake provides housing to the homeless. Radically simple, isn’t it? They provide housing, which clears and cleans the streets, and it turns out that it’s cheaper than letting people freeze to death and/or suffering horrific injuries that need the emergency department as a primary means of care.

When you provide housing first, you stop judging someone for all their faults, and start seeing a person that is from a community – who had varying opportunities to succeed. And best of all, it’s affordable.

The sun is beaming down and a breeze passes through my hair. It’s pleasant. And then I think, what will it be like for those out there on the streets tonight? I never used to think that, but now I do almost every day.

Share This:

Photo: Dagny Mol/Flickr

“Find a penny, pick it up, and all the day you’ll have good luck.”

That’s what I grew up saying, and occasionally, I can’t help but pick up a penny. The penny — a dirty brown, copper coin — is the lowest denomination we own as Americans. With inflation, rising prices, and a changing, digital economy, the penny doesn’t seem to be necessary. It’s really more weight than it’s worth.

It’s an interesting question, though: What amount of money would you need to see to pick it up? Would you go for a penny? How about a nickel, dime, quarter? When does picking up some loose change seem like a reasonable use of time? For me, if I see a nickel or more, my rapacious little hands are quick to grab it.

I’m a man with nary a dime of net worth, finding a nickel feels like winning the lotto. Well, maybe I’m being a bit hyperbolic, but you get the picture. In my current economic state, the percentage that a nickel, dime, or quarter contains is worth my bending down to grab it. But it’s important to keep some perspective about wealth in the United States.

When you’re a billionaire like Bill Gates, reaching for that little coin may cost you more than it’s worth. Here’s the always amazing, talented, and funny, Neil deGrasse Tyson to explain: